Senator David Norris' address to Seanad Eireann (the Irish Senate)

In Sept. 2007, fourteen months before Ireland's bank bailout, I resigned from my position as the Risk Manager of UniCredit Bank Ireland. I did that in order not to incriminate myself. I have spent the last 4 years seeking justice. On Feb. 23rd., 2010, I was fortunate to have Senator David Norris raise the matter in Seanad Eireann (the Irish Senate), and request a response from the Minister of Finance, Mr. Brian Lenihan. Senator Norris concluded by stating that:
"...there is ministerial responsibility in this matter. This is a grossly serious matter which has been reported to the Financial Regulator. A man has lost his job as a result. He honourably resigned. The degree of breach was 40 times the accepted margin. This is a disaster. If we are not prepared to face the issue and investigate it when it has been laid before the House, there is absolutely no hope for the financial system or its reputation worldwide...How can the Financial Regulator investigate himself? He was in breach of his responsibility."
In Nov. 2011, Emma Alberici, Europe correspondent for ABC TV, told my story as part of her documentary 'Going Rogue' which featured Nick Leeson and Sir John Vickers among other interviewees. It is ironic that at a time when the Irish tax-payer is bailing out un-secured bond holders, my story which occurred in Dublin, is deemed of interest to the Australian TV license payer. Please click on 'play video' on the following link:
VRT, Belgian state-TV, aired this interview with me on March 6th., 2013. My Interview begins in minute 27:
Het verdriet van Europa: Zeepbellen blazen (The sadness of Europe: Bursting bubbles)
VRT, Belgian state-TV, released extra footage of my interview on March 8th., 2013. (in English):

Monday, 25 July 2011

Ireland has become the UK's Greece...

So now we have the UK government using its tax-payers' money to bail-out a sinking Irish bank. GolemXIV writes this afternoon:

RBS bailing out Bank of Ireland

The Bank of Ireland saga continues.

Here is an article from
the Irish Independent from Saturday. It begins,
BANK of Ireland (BoI) yesterday raised €2.9bn in fresh short-term funding, believed to be from Royal Bank of Scotland(RBS), as the bank fights to stay out of state control.
And of course RBS is owned by you and me. So a British bank which was nationalized to save it from insolvency, is now lending to an Irish bank to save it from insolvency and being nationalized.

Several questions beyond the simple WHY? First what does RBS get from this deal? Why does the British Government (for their proxies would surely have been consulted)  think this is a good thing to spend money on at a time when our banking sector is not healthy enough to stand on its won feet and our public spending is being cut with a savage glee?

And why does the Irish Government prefer this solution plus selling stakes to unidentified investors in New York, to nationalizing via further Irish State support?

The broad details of the deal are that BoI will pay RBS 2.76% above the Libor rate which banks usually charge to lend to each other. The duration of the loan is for 2,2 years.  So this is short but not very short. It is the kind of debt that before the crash risk managers smiled upon. Swapping out longer loans for shorter ones of this sort of length. But that was then.  These days the banks are a little less sanguine about the brilliance of being dependent on short term loans that have to be rolled. So this is probably the longest RBS would settle for.

The rate speaks for itself.  So this could just be RBS thinking here is a way of placing 2.9 Billion in a profitable deal.  But I don't think that explains it. BoI is not a great bet and neither is Ireland as a whole,  The implicit government guarantee of not letting 'to big to fail' banks go down has to be questioned by the very fact that the Irish government is now hitting bond holders of Junior and unsecured debt for 80-90% losses. (Not that those holding the debt will lose that much since many will have bought the debt more recently at a discount when they [purchased. But this is still making the private bond holders share the pain. So there is no blanket guarantee. So why would RBS want to get involved at such a volatile time?

I think we have to entertain the possibility that RBS is lending to cover larger losses if BoI was to fail. RBS is one of the British banks I have long suspected was heavily exposed to Ireland. I think RBS is trying to save itself via this deal. The banks call it a loan. I see it as a bail out. The two states are using private banks as cover.

The larger question is what the position of the Irish government is and its debt sewer NAMA.  NAMA is the Irish 'bad bank' which has previously bought up a river of effluent from the Irish Banks. More recently it has been buying less. Why?  You could argue, sound business sense. But why would we get an outbreak of that where it has never been seen before.

I think NAMA is hiding its own rising pressure of troubles. This BoI deal suggests to me pressures are growing and options for addressing them are dwindling.

Germany is trying to control an explosive pressure in Greece. The UK is dealing with something so far smaller but potentially larger in Ireland. In Germany the voters are aware of what extra debts and risks they are being forced to shoulder. And they are angry and getting angrier. In the UK the voters are unaware. Unaware of what RBS is doing and what extra risks  that exposes  the UK tax payer to.